B-155466, B-155552, JAN. 21, 1965, 44 COMP. GEN. 412

B-155466,B-155552: Jan 21, 1965

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ETC. - "NO-CHARGE" BID CONTRARY TO INVITATION A BID PREDICATED ON THE RENT-FREE OF GOVERNMENT-OWNED FACILITIES IN RESPONSE TO AN INVITATION PROVIDING FOR THE EVALUATION OF BIDS ON THE BASIS OF A USE AGREEMENT CONSUMMATED PRIOR TO BID OPENING DATE FOR THE PAYMENT OF A FAIR RENTAL VALUE FOR THE USE OF SPECIAL TOOLING AND/OR FACILITIES IS A NONRESPONSIVE BID THAT MAY NOT BE CURED THROUGH EXPLANATIONS OF INTENT AFTER BID OPENING TO THE PREJUDICE OF THE COMPETITIVE BIDDING SYSTEM. INCONSISTENT WITH THE TERMS OF THE INVITATION PRESCRIBING THAT A PERTINENT EVALUATION FACTOR IS THE OBLIGATION OF THE BIDDER TO INCUR RENTAL CHARGES FOR THE USE OF GOVERNMENT PROPERTY. YOUR BID WAS REJECTED BY THE PROCUREMENT AGENCY ON THE GROUND OF NONRESPONSIVENESS SINCE IT WAS PREDICATED ON THE RENT-FREE USE OF GOVERNMENT-OWNED FACILITIES CONTRARY TO THE PROVISIONS OF THE PARAGRAPH ON PAGE 11 OF THE INVITATION ENTITLED "USE AGREEMENTS.

B-155466, B-155552, JAN. 21, 1965, 44 COMP. GEN. 412

BIDS - EVALUATION - GOVERNMENT EQUIPMENT, ETC. - "NO-CHARGE" BID CONTRARY TO INVITATION A BID PREDICATED ON THE RENT-FREE OF GOVERNMENT-OWNED FACILITIES IN RESPONSE TO AN INVITATION PROVIDING FOR THE EVALUATION OF BIDS ON THE BASIS OF A USE AGREEMENT CONSUMMATED PRIOR TO BID OPENING DATE FOR THE PAYMENT OF A FAIR RENTAL VALUE FOR THE USE OF SPECIAL TOOLING AND/OR FACILITIES IS A NONRESPONSIVE BID THAT MAY NOT BE CURED THROUGH EXPLANATIONS OF INTENT AFTER BID OPENING TO THE PREJUDICE OF THE COMPETITIVE BIDDING SYSTEM, AND ALTHOUGH THE BIDDER'S FACILITIES CONTRACT PERMITTED THE PAYMENT OF RENT, THE BID SUBMITTED ON A "NO CHARGE" BASIS FOR THE USE OF GOVERNMENT FACILITIES, INCONSISTENT WITH THE TERMS OF THE INVITATION PRESCRIBING THAT A PERTINENT EVALUATION FACTOR IS THE OBLIGATION OF THE BIDDER TO INCUR RENTAL CHARGES FOR THE USE OF GOVERNMENT PROPERTY, DEVIATING FROM THE INVITATION MAY NOT BE EVALUATED ON THE BASIS OF INCLUDING AFTER BID OPENING THE COMPETITIVE EQUALIZATION FACTOR OF A RENTAL CHARGE IN THE BID PRICE.

TO THE OLIN MATHIESON CHEMICAL CORPORATION, JANUARY 21, 1965:

BY LETTER DATED OCTOBER 23, 1964, WITH ENCLOSURES, YOU PROTESTED AGAINST THE REJECTION OF YOUR BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. AMC (A) 36-038-65-78 (CAI), ISSUED ON AUGUST 4, 1964, BY FRANKFORD ARSENAL, U.S. ARMY MATERIEL COMMAND. YOUR BID WAS REJECTED BY THE PROCUREMENT AGENCY ON THE GROUND OF NONRESPONSIVENESS SINCE IT WAS PREDICATED ON THE RENT-FREE USE OF GOVERNMENT-OWNED FACILITIES CONTRARY TO THE PROVISIONS OF THE PARAGRAPH ON PAGE 11 OF THE INVITATION ENTITLED "USE AGREEMENTS--- GOVERNMENT OWNED PROPERTY.'

THE INVITATION, AS AMENDED, CALLED FOR BIDS ON THREE ALTERNATE QUANTITIES OF 5.56 MM TRACER XM-196 CARTRIDGES; (A) 3,500,000 (B) 5,000,000 AND (C) 10,000,000 ONLY ONE OF WHICH WOULD BE AWARDED. TWO BIDS WERE RECEIVED AND OPENED ON SEPTEMBER 14, 1964, AS FOLLOWS:

TABLE

OLIN'S TOTAL REMINGTON'S TOTAL

QUANTITIES BID PRICE BID PRICE

3,500,000 $343,000 $349,475

5,000,000 460,000 483,500

10,000,000 820,000 933,500

IN A LETTER DATED SEPTEMBER 10, 1964, ATTACHED TO AND MADE A PART OF YOUR BID, YOU STATED:

IN ACCORDANCE WITH PARAGRAPH ENTITLED, USE AGREEMENTS-GOVERNMENT OWNED PROPERTY, PAGE 11 OF SUBJECT INVITATION, ATTACHED IS:

1. COPY OF LETTER FROM THE ST. LOUIS PROCUREMENT DISTRICT DATED 1 SEPTEMBER 1964 SIGNED BY ELMER S. CRAWFORD, CONTRACTING OFFICER, EVIDENCING THE FACT THAT WE HAVE A "USE AGREEMENT" WITH ST. LOUIS PROCUREMENT DISTRICT AND AUTHORIZING USE ON A NO-CHARGE, NON INTERFERENCE BASIS THOSE ITEMS OF GOVERNMENT PROPERTY NECESSARY FOR PRODUCTION OF CARTRIDGES UNDER SUBJECT INVITATION AND,

2. THE LIST OF FACILITIES TO BE USED.

THE CITED INVITATION ARTICLE PROVIDED:

ALL BIDDERS OR POTENTIAL SUBCONTRACTORS AT ANY LEVEL OR TIER WHO INTEND TO USE, FOR THE MANUFACTURE OF ANY PART OF THE END ITEM OR ITEMS BEING PROCURED UNDER THIS INVITATION FOR BID, GOVERNMENT-OWNED SPECIAL TOOLING AND/OR FACILITIES WHICH ARE CURRENTLY IN THEIR POSSESSION, IN LAYAWAY, OR ASSIGNED TO THEM UNDER THE INDUSTRIAL READINESS PROGRAM, ARE CAUTIONED THAT USE AGREEMENTS REQUIRING THEM TO PAY A FAIR RENTAL VALUE FOR THE USE OF SUCH SPECIAL TOOLING AND/OR FACILITIES MUST BE CONSUMMATED WITH THE COGNIZANT DISTRICT OR AGENCY PRIOR TO THE OPENING DATE OF THIS BID.

EVIDENCE OF SUCH "USE AGREEMENTS" AND A LIST OF SUCH SPECIAL TOOLING AND/OR FACILITIES SHALL BE FURNISHED BY THE BIDDER WITH HIS BID OR BY APPROPRIATE MODIFICATION OF HIS BID RECEIVED PRIOR TO OPENING.

UNLESS THE FOREGOING HAS BEEN ACCOMPLISHED, USE OF GOVERNMENT-OWNED SPECIAL TOOLING AND/OR FACILITIES INVOLVED WILL NOT BE AUTHORIZED, AND ANY BID PROPOSING SUCH USE WILL BE CONSIDERED NON-RESPONSIVE.

FOR THE PURPOSE OF THIS INVITATION, THE PROPOSED PRODUCTION PERIOD WILL BE FOR ITEMS 1A--- 5 MONTHS, 1B--- 7 MONTHS AND 1C--- 12 MONTHS.

THE LETTER OF AUTHORIZATION FROM THE ST. LOUIS PROCUREMENT DISTRICT, TO YOU, DATED SEPTEMBER 1, 1964, STATED THAT:

THIS LETTER IS YOUR AUTHORITY TO USE, ON A NO-CHARGE, NON INTERFERENCE BASIS, IN THE EVENT YOU RECEIVE AN AWARD, SUCH ITEMS OF GOVERNMENT PROPERTY AS ARE NECESSARY FOR PRODUCTION OF THE CARTRIDGES AND AS ENUMERATED IN YOUR BID, IN ACCORDANCE WITH THE TERMS OF SUCH CONTRACT AS MAY BE WRITTEN.

SINCE YOU OFFERED, IN EFFECT, TO FURNISH THE AMMUNITION UNDER THE INVITATION USING GOVERNMENT-OWNED PROPERTY ON A NO-CHARGE BASIS, YOUR BID WAS REJECTED FOR FAILURE TO COMPLY WITH THE ABOVE-QUOTED INVITATION PROVISIONS. THE ACTION TAKEN BY THE PROCUREMENT AGENCY, IN OUR OPINION, WAS PROPER UNDER THE CIRCUMSTANCES.

YOU CONTEND THAT DECISION B-152801, DATED FEBRUARY 3, 1964, CITED BY THE PROCUREMENT AGENCY AS AUTHORITY FOR ITS REJECTION ACTION, IS INAPPLICABLE TO YOUR CASE BECAUSE, IN THAT CASE, THE BID WAS MADE CONTINGENT UPON THE ACCEPTANCE OF THE RENT-FREE USE CONDITION IN THE BID WHEREAS YOUR BID WAS NOT CONTINGENT OR CONDITIONED UPON THAT CONSIDERATION. WE DO NOT AGREE. YOUR BID WAS MADE SUBJECT TO THE AUTHORIZATION FOR "NO-CHARGE USE" FROM THE ST. LOUIS PROCUREMENT DISTRICT. YOUR BID ON PAGE 3 OF THE INVITATION SCHEDULE MAKES THIS AMPLY EVIDENT SINCE YOU STATED THEREON THAT THE AUTHORIZATION LETTER "FORMS PART OF OUR PROPOSAL.' YOUR BID, AS SUBMITTED, CONTAINED NOTHING FROM WHICH IT COULD BE INFERRED THAT YOU INTENDED TO PAY A RENTAL ON GOVERNMENT PROPERTY TILIZED; IN FACT, SUCH INFERENCE WOULD BE INCONSISTENT WITH THE PLAIN LANGUAGE OF YOUR BID. MUST, THEREFORE, AGREE WITH THE PROCUREMENT AGENCY THAT YOUR BID WAS CONDITIONED UPON RENT-FREE USE OF GOVERNMENT-OWNED FACILITIES. IN B 152801, WE STATED:

* * * WE THINK THAT VALID PROVISIONS IN INVITATIONS FOR BIDS CANNOT BE SUPERSEDED OR ABROGATED BY AUTHORIZATIONS IN DEROGATION OF THOSE PROVISIONS ISSUED BY CONTRACTING OFFICERS, SUCH AS MR. FRUMAN IN THIS INSTANCE, WHO ARE WITHOUT JURISDICTION AND AUTHORITY OVER THE PROCUREMENT INVOLVED. IF SUCH ACTION WERE PERMITTED CONFUSION AND CHAOS WOULD BE INTRODUCED INTO THE PROCUREMENT PROCESS.

IN THIS CONNECTION ARMED SERVICES PROCUREMENT REGULATION 13-502.3 (A) AND 13-502.4 PROVIDE:

13-502.3 LIMITATIONS.

(A) THE INVITATION FOR BIDS SHALL PROVIDE THAT NO USE OF GOVERNMENT PRODUCTION AND RESEARCH PROPERTY OTHER THAN AS DESCRIBED AND PERMITTED PURSUANT TO 13-502.2 SHALL BE AUTHORIZED UNLESS SUCH USE IS APPROVED IN WRITING BY THE CONTRACTING OFFICER COGNIZANT OF THE PROPERTY, AND EITHER RENT CALCULATED IN ACCORDANCE WITH 13-404 IS CHARGED, OR THE CONTRACT PRICE IS REDUCED BY AN EQUIVALENT AMOUNT.

13-502.4 RENT. IF COMPETITIVE ADVANTAGE IS TO BE ELIMINATED BY CHARGING RENT, ANY BIDDER OR SUBCONTRACTOR MAY USE GOVERNMENT PRODUCTION AND RESEARCH PROPERTY AFTER OBTAINING THE WRITTEN APPROVAL OF EACH CONTRACTING OFFICER HAVING COGNIZANCE OF SUCH PROPERTY. RENT SHALL BE CHARGED FOR SUCH USE IN ACCORDANCE WITH 13-404.

WHILE IT MAY BE TRUE THAT YOUR FACILITIES CONTRACT PERMITS THE PAYMENT OF RENTAL, THE FACT REMAINS THAT YOU DID NOT CHOOSE TO BID ON A RENTAL BASIS BUT RATHER, YOU ELECTED TO BID ON A ,NO-CHARGE" BASIS. AS STATED ABOVE, THIS IS PLAINLY INCONSISTENT WITH THE TERMS OF THE INVITATION. AGAIN, REFERRING TO B-152801, WE HELD:

* * * ONE OF THE CARDINAL RULES OF THE COMPETITIVE BIDDING SYSTEM REQUIRES THAT BIDDERS MUST BE GIVEN THE OPPORTUNITY TO COMPETE ON A COMMON BASIS AND THAT THE BIDS RECEIVED MUST BE EVALUATED ON A COMMON BASIS. IS CLEAR THAT THE CHAMBERLAIN CORPORATION'S BID, BY SPECIFYING RENT-FREE USE OF FACILITIES, FAILS TO CONFORM TO THE USE AGREEMENT PROVISIONS OF THE INVITATION WHICH OBVIOUSLY WERE INCLUDED IN THE INVITATION FOR THE PURPOSE OF EQUALIZING THE COMPETITIVE POSITION AMONG BIDDERS WHICH HAVE, AND THOSE WHICH DO NOT HAVE, GOVERNMENT-OWNED FACILITIES AT THEIR DISPOSAL. THE CONDITION IMPOSED BY CHAMBERLAIN PRECLUDES THE CONTRACTING OFFICER FROM PERFORMING A BID EVALUATION WHICH WOULD EQUATE ALL BIDDERS AS REQUIRED BY THE LAW GOVERNING FORMALLY ADVERTISED PROCUREMENTS. ACCEPTANCE OF THE CHAMBERLAIN CORPORATION'S BID WOULD BE PREJUDICIAL TO OTHER BIDDERS AND WE MUST CONCLUDE, THEREFORE, THAT SUCH BID SHOULD BE REJECTED AS NONRESPONSIVE TO THE TERMS OF THE INVITATION. 40 COMP. GEN. 701.

NEXT, YOU CONTEND THAT PROCUREMENTS OF AMMUNITION BY THE AMMUNITION PROCUREMENT AND SUPPLY AGENCY PERMITTED RENT-FREE USE OF FACILITIES. THIS FACT HAS NO PERSUASIVE EFFECT SINCE EVALUATION OF BIDS IS WHOLLY DEPENDENT UPON THE TERMS AND CONDITIONS OF THE PARTICULAR INVITATION WITHOUT REFERENCE TO PAST SOLICITATIONS BY OTHER PROCUREMENT AGENCIES UNDER DIFFERENT TERMS AND CONDITIONS.

WHILE YOU MAY REGARD ANY RENTAL COSTS WHICH MIGHT BE APPLICABLE TO YOUR BID AS A CONTINGENCY, LIKE OTHERS, WHICH YOU WOULD ABSORB AS PART OF YOUR CONTRACT OBLIGATION, THE FACT REMAINS THAT YOUR BID WAS NONRESPONSIVE AND SUCH CONDITION MAY NOT BE CURED AFTER OPENING THROUGH EXPLANATIONS OF INTENT TO THE PREJUDICE OF THE COMPETITIVE BIDDING SYSTEM AND THE CLEAR PURPOSE OF THE INVITATION. 43 COMP. GEN. 96.

THAT THE CONTRACTING OFFICER ADVISED YOU THAT EVEN AFTER APPLICATION OF AN EVALUATION FACTOR TO YOUR BID--- ASSUMING THAT YOUR BID WAS FULLY RESPONSIVE--- IT WOULD NOT HAVE BEEN LOW, HAS NO SIGNIFICANT BEARING HERE ALTHOUGH YOU SHOW BY USE OF AN EVALUATION FACTOR THAT YOU WOULD IN FACT BE THE LOWEST BIDDER. THE SHORT ANSWER TO THIS IS THAT THE INVITATION DID NOT PROVIDE FOR SUCH AN EVALUATION BUT FOR EVALUATION OF A RENTAL CHARGE FOR USE OF GOVERNMENT PROPERTY TO BE INCLUDED IN THE BID PRICE.

CONCERNING YOUR ARGUMENT THAT THE "OUT-OF-POCKET" COST FACTOR EXCLUSIVE OF GOVERNMENT-OWNED FACILITIES SHOULD HAVE BEEN APPLIED AS IT WAS IN DECISION B-153687, DATED JULY 7, 1964, YOU ARE ADVISED THAT THE EVALUATION OF BIDS HERE WAS NOT DEPENDENT ON THE GOVERNMENT'S "OUT-OF POCKET" COSTS EXCLUSIVE OF RENTAL COSTS OF GOVERNMENT FACILITIES. HERE AGAIN, THE EVALUATION FACTOR PERTINENT IN THE INSTANT INVITATION WAS THE OBLIGATION TO INCUR RENTAL CHARGES FOR GOVERNMENT FACILITIES IF A BIDDER SUBMITTED A BID WITHIN THE CONTEMPLATION OF THE ABOVE QUOTED ARTICLE ON PAGE 11 OF THE INVITATION. IT SHOULD BE NOTED THAT DECISION B-153687 DEALT WITH AN INVITATION WHICH CONTAINED A CLAUSE ENTITLED "USE OF GOVERNMENT-OWNED PROPERTY: (USE AS-IS-WHERE-IS WITHOUT CHARGE).' THE DISTINGUISHING CHARACTERISTIC THEN IS THE PARTICULAR GOVERNMENT PROPERTY CLAUSES USED IN A PARTICULAR INVITATION. SEE 43 COMP. GEN. 327; ID. 604. HENCE, RENT- FREE GOVERNMENT PROPERTY CLAUSES MAY NOT BE USED AS A BASIS OF BID EVALUATION UNDER AN INVITATION WHICH CONTAINS ONE WHICH IS SIGNIFICANTLY DIFFERENT IN THAT IT REQUIRES A RENTAL-COST INCLUSION IN BIDS PROPOSING TO USE GOVERNMENT PROPERTY.

WE HAVE CONSIDERED THE OTHER ARGUMENTS ADVANCED BY YOU BUT WE FEEL THAT THEY ARE NOT RELEVANT TO YOUR PROTEST. WE CANNOT AGREE THAT YOU WERE AT A COMPETITIVE DISADVANTAGE WITH REMINGTON. IT WOULD SEEM THAT COMPETITIVE ADVANTAGE OR DISADVANTAGE COULD ONLY EXIST IF THE COMPLAINING BIDDER WAS OTHERWISE RESPONSIVE TO THE INVITATION. COMPETITION HERE WAS EQUALIZED INSOFAR AS GOVERNMENT EQUIPMENT WAS CONCERNED BY USE OF A RENTAL FACTOR TO BE INCLUDED IN THE PRICE BID. THIS EQUALIZATION FACTOR COULD NOT UNDER RECOGNIZED PRINCIPLES BE APPLIED AFTER BIDS WERE OPENED IN THE CASE OF A BIDDER WHO HAD SUBMITTED A BID DEVIATING FROM THE ADVERTISED REQUIREMENTS.

WE ALSO CONSIDERED YOUR PROTEST AGAINST THE REJECTION OF YOUR BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. AMC (A) 36-038-65-95 (CAI). YOUR BID UNDER THAT INVITATION WAS ALSO REJECTED ON THE GROUND OF NONRESPONSIVENESS FOR THE REASON THAT IT WAS PREDICATED ON THE RENT FREE USE OF GOVERNMENT-OWNED FACILITIES CONTRARY TO THE INVITATION PROVISIONS RESPECTING THE UTILIZATION OF GOVERNMENT-OWNED PROPERTY BY A PROSPECTIVE BIDDER. WHAT WE HAVE HELD WITH RESPECT TO INVITATION NO. 78 IS EQUALLY APPLICABLE TO INVITATION NO. 94 WHICH WAS THE SUBJECT OF YOUR LETTER OF NOVEMBER 4, 1964.